The recent surge in gold prices has turned Costco into a hotbed for gold buyers, with approximately 77% of its U.S. locations selling out of gold bars by early October. As gold prices reach record highs, consumers are not only drawn to Costco for its membership discounts but also for its attractive rewards program, with many viewing gold as a hedge against inflation.
Bloomberg reports that the spot price of gold has soared nearly 30% this year compared to last, cementing its status as one of the best-performing commodities. This trend underscores gold’s allure as a safe haven asset amid geopolitical and economic uncertainties, as well as its vital role in wealth preservation. Last month, the price of gold eclipsed $2,600 per ounce, largely driven by a decline in interest rates from the Federal Reserve, which typically boosts the appeal of non-yielding assets like gold.
Costco’s website lists the pre-tax price for a one-ounce gold bar at $2,689.99, but currently, this product is out of stock. Notably, Costco’s prices often undercut those at traditional precious metal dealers, and their membership rewards provide an additional incentive. A recent Bloomberg survey, which involved inquiries at 101 Costco locations across 46 states, found that 77% of these stores had completely sold out of their gold bar inventory by the first week of October.
Interestingly, there’s evidence that financially strapped Americans are capitalizing on rising gold prices. Many are purchasing gold in bulk from Costco while simultaneously selling their existing gold for profit; pawnbrokers and jewelry stores in New York, for example, are experiencing a surge in sellers. This booming gold market at Costco has invigorated the retail gold sector. The company began offering gold bars in its U.S. stores and online last June. These Swiss-made 24-carat gold bars are packaged in a fashion reminiscent of chocolate bars, utilizing cardboard and plastic. During a financial earnings call last September, Costco executives highlighted that gold sales had become quite popular, with sales exceeding $100 million in just one fiscal quarter, which is approximately 51,740 ounces based on average prices at that time.
Gary Millerchip, Costco’s Chief Financial Officer, remarked in an email that gold and silver sales are a “significant component” of the company’s e-commerce growth. Stefan Gleason, CEO of a leading precious metals retailer, emphasized that Costco is making gold ownership more accessible than ever. Currently, it is estimated that only about 2% of Americans own gold or silver; even a modest increase to 5% or 10% could significantly influence the market.
Ms. Li, a Chinese American, has encountered difficulties when trying to purchase gold bars from Costco. She noted that the enthusiasm for gold among the Chinese community is markedly higher compared to other ethnic groups; in mainland China, trends encouraging gold purchases emerge daily. Regrettably, the Costco in her area has limited availability of gold bars, leading her to frequently check other locations for stock. Over the past six months, skyrocketing gold prices have made Costco’s gold bars increasingly pricey, with prices climbing over $800 since her last visit.
